Advantech Co Ltd

TWSE:2395

Earnings Call Transcript 2020-Q3

[Pauline Chen, analyst]

Hello, everyone. Thank you very much for joining Advantech's Third Quarter Results Conference Call. This is Pauline Chen from Crédit Suisse. It is our honor today to have Advantech's President and CFO, Mr. Eric Chen; President and Head of Embedded IoT Group, Mr. Miller Chang; and IR Manager, Ms. Jill Su, to share with Advantech's third quarter results and updated outlook. The management team will go through the presentation first, followed by the Q&A session.

I will now hand over the call to Jill. Jill, please. Thank you.

[Jill Su, executive]

Thank you, Pauline. Good morning, and good afternoon, ladies and gentlemen. Thank you for your participant of Advantech third quarter results conference call. The meeting material is ready for download at our IR website, www.advantech.com/investor.

This is Jill Su, the IR Manager of Advantech. Today, I will take a few minutes to go through the 3Q results, and then Mr. Eric Chen, our President and CFO, will brief the business outlook. And then luckily, we also invite Mr. Miller Chang, the President of EIoT, to join the call for the Q&A session.

Please go to Page #2. As usual, please take a few seconds to read through the safe harbor notice.

Okay. Let's go to Page #3, the year-to-date financial results. In third quarter, revenue down 7% quarter-on-quarter and 9% year-on-year to TWD 13 billion. Gross margin came at 39.8%, down slightly quarter-on-quarter but improved year-on-year. Operating expense was flattish quarter-on-quarter but declined 4% year-on-year. Operating margin was 17.3% in third quarter. Operating profit declined 20% quarter-on-quarter and 14% year-on-year to TWD 2.26 billion.

In nonoperating side, Advantech booked TWD 98 million dividend income in third quarter. The effective tax rate was 20.7%. Net income declined 15% quarter-on-quarter and 9% year-on-year to TWD 1.9 billion. EPS was TWD 2.52 per share in third quarter.

For the year to third quarter performance, revenues dropped 6% year-on-year. Gross margin was 40%, improved on a year-on-year basis. Operating margin reached 17.6%. Net income dropped 2% year-on-year to TWD 5.5 billion. Year to third quarter EPS was TWD 7.2 per share.

Please go to Page #4, the year to third quarter revenue performance by region. In U.S. dollars, the year-to-date revenue decreased 2.2% year-on-year. North America and the euro market declined 2% and 8%, respectively. China and Taiwan market increased 1% and 3%, respectively. North Asia totally dropped 6% year-on-year, mainly due to weak performance in Japan market. At the same time, actually, Korean market still report 14% year-on-year growth rate year-to-date. Other Asia and the emerging market totally increased 1% year-on-year, but the individual market performance vary a lot, which is highly correlated to the national-wide lockdown policy in different countries and the region.

Please go to Page #5, the year to third quarter performance by strategic business group. Industrial IoT group revenue increased 1% year-on-year, and Applied Computing Group reported flattish year-on-year revenue performance. Embedded IoT Group dropped 5% year-on-year, and the Service IOT Group dropped 3% year-on-year. In all business group, only Cloud IoT Group dropped double-digit year-on-year, 12% year-on-year, mainly due to the key account customers delaying their shipment schedule since August this year.

Most product division reported year-on-year margin improvement. In addition to pricing strategy and the [ leasing share ] operating efficiency improvement, the raw material price stabilization is also positive to the margin profile in third quarter.

Please go to Page #6, the working capital and the balance sheet. Advantech generated TWD 6.5 billion operating cash flow in third quarter and paid TWD 5.5 billion cash dividend at the same time. The turnover days for account receivable and account payable remained quite healthy in third quarter. The inventory turnover days still at a high level, over 100 days at the end of third quarter, due to weakening business sentiment. But at the same time, the inventory dollar declined TWD 1.2 billion in third quarter. Due to some delay of the Linkou campus new building construction, the overall CapEx this year might be around TWD 1 billion to TWD 1.1 billion.

Now I would like to hand over the time to Mr. Eric Chen, the CFO and President, for the business outlook. Eric?

[Eric Chen, executive]

Thank you, Jill. Good morning, and good afternoon, everyone. Welcome to join the conference today. This is Eric, and I would like to give you the guidance regarding the quarter 4, starting from the geographies.

The B/B ratio in quarter 3 was 0.97, which shows that customer demand has turned conservative towards quarter 4. By application market, only medical sectors in China and in the U.S. implies positive growth. Also, a lot of design-in customers postponed their shipment schedule. The overall Q4 momentum will come lower than quarter 3.

If we look into the big area that are the U.S., Europe and China in quarter 3, the total revenue was close to our predictions before. Europe performance was stable and better than our brand, but China was slightly lower than our expectations. In quarter 4, Europe might have the chance to present a positive growth. The worldwide sentiment might higher than China and the U.S. region.

As for the North Asia, Japan market remained weak for the full year. Korean market remains a solid growth in Q4. Taiwan market is expected to see it flat in quarter 4. For the rest of the world, it's highly related to the lockdown situation across the countries and the cities. The performance will vary a lot. Australia, Israel and Vietnam might report a double-digit growth in the 2020.

So let's move on, the guidance by sector and the business group. The outperforming sectors are medical sectors, including the increasing demand in patient infotainment terminals and Edge Computing with AI accelerating card in the automation area. These 2 sectors will drive the growth in EIoT embedded board and IIoT modular IPC. As for the underperforming sectors, retail and gaming sectors remained weak. Part of gaming customers was back to work and request shipment in the quarter 3. This is good news for the gaming sectors.

DMS/EMS customers performed weakly in Japan due to a conservative view of the demand side. The potential market opportunities: the commercialization of 5G will drive the demand for industrial automation but not yet happen. The most promising applications will be the smart factory and AOI robotics.

So based on the current business outlook and the overall impact of COVID-19, we expect fourth quarter revenue to be between the USD 420 million to the USD 440 million based on the exchange rate assumption rate of USD 1 to TWD 29. In terms of margin, the fourth quarter gross margin is expected to be between 38% and 40%, and our operating margin is expected to be between 16% and 18%.

Overall, the year 2020 is a challenging year for Advantech. Our revenue might end up with a single-digit drop, and this is the second time that we encountered in the past 36 years. The next one was the year 2009 financial crisis. However, with the margin improved and the reduction of the T&E expense, we still maintain a very consistent operating margin rate for the long run. We do expect that demand will increase and the business activity will recover in the year 2021. In addition, we will continuously improve our product portfolio and operating efficiency.

This concludes all my comments, and thank you for your attention.

[Jill Su, executive]

Thank you, Eric. Now let's open the Q&A session.

[Operator]

[Operator Instructions]

Your first question is from Willy Chen of JPMAM.

[William Chen, analyst]

Can you hear me?

[Jill Su, executive]

Yes. Very clear.

[William Chen, analyst]

Can you hear me? Okay. So just one question regarding to China performance. I saw that in third quarter, actually, the growth was decelerating versus the first half. And consider that this -- from ground here in China is that there's pretty strong industrial automation recovery and also pretty strong infrastructure spending, can you share a bit more colors why our China performance was a negative growth in third quarter? And what's the outlook in fourth quarter?

[Jill Su, executive]

Okay. Willy, this is the indication from our booking situation for now. So this is based on maybe our channel cost and the relative conservative full year booking in terms of now. But we also see some of the bright side starting from September and October booking number.

So I think in terms of the China sentiment, we see a relative conservative sentiment in fourth quarter, but this is not indicating we will see a quarter-on-quarter decline in first quarter next year. So this is what we're seeing for now.

[William Chen, analyst]

Can I have a follow-up? Like do you have the order book numbers for China? I think that you mentioned there is some conservativeness there.

[Jill Su, executive]

Okay. We don't disclose some details -- B/B ratio by country and by sector. But I'd like sharing with you that in month-on-month basis, both the September and October booking in China increased quite significantly.

[Eric Chen, executive]

Yes. The booking numbers in September and October is almost recovery -- increased around 20% compared with the August and July.

[Operator]

We currently don't have any questions from the line. [Operator Instructions]

[Pauline Chen, analyst]

While we are still waiting for questions, maybe I can kick off a few questions first. Regarding the third quarter, you highlighted that Cloud IoT has a project delay. Could you elaborate a little bit more which region is related to that project? And when do you expect the project to be [ recent ]?

[Miller Chang, executive]

Okay. This is Miller speaking. Regarding for the Cloud IoT, the project to date, it's mainly come from, one, our Asian customer. They are doing some entertainment, but they need cloud and infrastructure services. So because of Japan market, they are quite slow this year, so that's the reason. There are a big delay for our product shipment. This is one major reason.

[Pauline Chen, analyst]

Yes. And so when do we expect this project to kick off again?

[Miller Chang, executive]

Actually, the project is not stopped but just postponed some shipment from this year to next year. So we will share with our customer great detail by end of this year that we will understand that what the net forecast shipment for next year.

[Pauline Chen, analyst]

Okay. Yes. So also on the result regarding the different performance like EIoT and SIoT, we do see the growth accelerating in SIoT, okay, and EIoT is a little bit decelerate. Any reasons behind that?

[Miller Chang, executive]

Sorry. You mentioned about...

[Eric Chen, executive]

The EIoT. Yes.

[Pauline Chen, analyst]

Yes. Yes. SIoT and also -- yes, Embedded IoT and also Service IoT.

[Miller Chang, executive]

Let me talk about EIoT first. The major reason is they are very focused on the design-in business model, which we need to work with our partner, system integrator or industrial manufacturing equipment maker, for their product development, which will take at least 12 months to 18 months design-in cycle. So that -- they are mainly for long-term projects, okay? So that means that this year revenue, actually, we already designed in from 1 year ago, even 18 months ago. So that will keep us -- our product, our revenue stable. This is the main reason.

Then you asked about SIoT. One of the big projects for them is they are making lots of progress for some logistics and some medical equipment solution recent years. So that's the reason they make some big growth momentum for the revenue contribution to Advantech.

[Operator]

We don't have any question from the line yet. [Operator Instructions] We have a question from Phelix Lee of Morningstar Asia.

[Yuk Yeung Lee, analyst]

I have a question -- I have 2 questions. So the first question is on the recent Board resolutions that agreed to increase the budget on the Linkou Phase 3 budget from TWD 1.05 billion to TWD 1.4 billion. Can you talk about the rationale and how the rationale to increase? And also how would that affect the R&D and our production capabilities of the company?

And then the second question would go to the margin side because I see in your guidance that the gross margin is declining, while the operating margin is increasing. So I'd like to know like how does the cost structure or any OpEx savings that the company is working towards in the quarter.

[Eric Chen, executive]

This is Eric, and let me answer your question regarding the Linkou factory construction. The reason why we -- our CapEx around 40%, most come from the growth areas. We increased more than 30% of the growth areas. Before, we have planned to construct B2 until 6 floors. But right now, the new design is B3 to 9 floors. So the floor area is bigger than our original plan. So these are main reason we increased the CapEx on the Linkou factory construction fleet.

[Jill Su, executive]

Phelix, this is Jill. Regarding the margin guidance for fourth quarter, I think I can give you some sort of indication. Number one, regarding the overall product portfolio, actually, will impact price significant for the gross margin profile. But for the operating margin, I think I've already making a very clear message in the beginning of the year because we don't do much marketing and traveling this year. So these 2 segments in historical numbers account around like 1% to 1.5% to our revenue. So this part actually is totally removed.

So this is another positive factor for the operating margin in the fourth quarter as well. So all in all, I think if you're looking into the top line guidance, yes, this year, we are quite challenging regarding the revenue growth but with quite significant enhancement regarding our product portfolio and our operating efficiency to enhance and to sustain our margin and the bottom line for the full year.

[Operator]

Okay. So the next question comes from the line of James Squire of Overlook.

[James St. Squire, analyst]

I think the first question, I think, for me is to -- with regards to your commentary on China, that you're seeing incrementally things improving. Could you be maybe a little bit more specific on which are the areas that you are seeing an improvement? So that's my first question.

[Jill Su, executive]

This is Jill speaking. I think for the China overall performance year-to-date, I think the Industrial IoT segment, they are relatively stable for the full year. There are also -- majority of the business coming from the automation sector, the infrastructure, demand actually are quite steady, and we still see year-on-year growth so far.

And one of the big swing factors coming from the equipment, and the other part will be the Cloud IoT business in China so far. So the weakness in third quarter, also in line with what Miller and Eric just mentioned, the design-in sector actually in China so far not really great. But we see improving booking number starting from September this year.

And another [ part is price ]. They are more project-based. So if one customer like postpone their project, we need to review which is the timetable they want to resume the shipment schedule. So I think this is a key swing factor for our China outlook so far.

[James St. Squire, analyst]

Understood. And if we were to look further up into next year, the question is that what kind of visibility do we have because -- with respect to kind of the top line because this year, we had some delays in saying that's resulting in postponement. And kind of do we have any visibility on where -- which sectors could be leading the rebound in 2021?

[Jill Su, executive]

This is Jill speaking. We think this is still too early to say because we're just kicking off our budgeting process this month, and maybe we'll finalize the overall number after Chinese New Year. We will release our 2021 guidance in March next year. So this is number one I can share with you.

And secondly, yes, we do want to see our year-on-year performance could turn positive in 2021. But regarding the numbers for now, I'm sorry, we could not provide a very detailed number. But in terms of the sector, there will be one [ very clear part that is the ] Cloud IoT because there are still quite significant project delays in second half of this year. And we also got some notice from the General Manager for Cloud IoT saying that actually they will see quite a significant rebound, maybe starting from second quarter 2021. So this is another factor we will see a positive growth.

And I think we also have some of the other segments, they have quite relatively steady business segments like our design-in. We also have some support initiative still quite smoothly. You have good progress this year. Even though we don't know what will be our official shipment time schedule from the customers so far, both in terms of the business outlook, still quite better than this year's situation.

[James St. Squire, analyst]

Okay. And just one more question on margins. And you mentioned this here that I mean the gross margins -- operating margins have been relatively good because of some of the expenses that you usually incur, you don't have to. Let's assume that things would normalize next year, do you see a permanent shift in terms of how some of these expenses or trend would you be -- do more sales, less traveling? Or would that -- will we see some form of normalization in expenses?

And another further question is also that we've seen the cash conversion cycle lengthen over the past number of quarters, which, as I understand, is how do we intend to normalize that? And what would be a normalized level?

[Jill Su, executive]

I think I'm missing your last question, but let's start regarding the margin part. Actually, we're kicking off the project called [ profit/loan ]. It means actually all the product segment, not only regarding the product, but also regarding the portfolio, the RD stage, we need to enhance the overall product portfolio starting from year 2019, and we already see some good results. And this year, COVID-19 do giving us a chance to evaluating of are we in the right direction or not. I think that so far we still do quite solid job so far. And this kind of operating efficiency and the portfolio management kind of enhancement, we will keep doing that no matter. Regarding the top line growth or decline, we will continue to doing that.

So actually, even though we don't have a long-term gross margin or operating guidance to -- in public, but actually, we're continuing to keeping our target saying that actually we want to achieve the net margin after tax to about 14.5% to 15% by year 2021. So still in the direction. We try to going ahead of our plans, and we could release a new target metric in March next year. So I think this is regarding the margin part.

And I think I missed your last question.

[James St. Squire, analyst]

Okay. My last question relates to the working capital cycle. So cash conversion cycles have lengthened over the last few quarters. Are there any plans to kind of normalize that? And what would kind of be a normalized level going forward?

[Jill Su, executive]

Okay. Yes, working capital. You can look into my presentation, Page #6. Yes, in terms of the overall cash conversion date, it's increasing. But you can look into the absolute dollar in each of the elements, including inventory, account receivable and account payable, actually, that all decreased quite significant in quarter-on-quarter base.

Yes, in [indiscernible], we still target the overall cash conversion cycle will go back to a normal level like below 100 days. And one of the key factor coming from the inventory turnover days because we're using the average -- moving average of dollar. So it means actually the inventory average will use in second quarter number, third quarter number as the base to calculating, but if we're looking year-on-year, actually, the number we're looking quite better.

So we're also setting the target. We need to reduce the inventory turnover days below 100 days by end of this year, and we already do quite a significant process on this. So next we see the results, but actually, we do want to increase our overall turnover days quite significant by end of this year.

[Eric Chen, executive]

I can give some -- a few comments on this topic. I have [ Ko Chen, our CEO and Chairman ] this morning. With the post inventory included raw material and [indiscernible] trend down in quarter 4. Actually, we already took some actions to improve our inventory level by lower our product forecast and stepping up. The total inventory amount already reduced by USD 38 million in quarter 3 compared with quarter 2. In quarter 4, we expect a total inventory a month will decrease a lot. So we expect the total inventory, and that we have only slightly higher than the year of 2019.

So we will keep some initiative to drive our inventory to a reasonable turnover days.

[Operator]

We currently don't have any questions from the line yet. [Operator Instructions] And we have a follow-up question from Willy Chen of JPMAM.

[William Chen, analyst]

Sorry, it's me again. Just a follow -- another follow-up question on China. So if you look at the past 3 years' performance in your China operation, you have actually maintained around 400 million per year, we also have flat in 3 straight years. So just wondering, do we incur any market share loss or competition in the China market? And then what's the strategy we have to grow the China business in the coming years?

[Miller Chang, executive]

This is Miller speaking. From the product segment point of view, we did not lose any project or business to our competition. But if you are asking about what the initiative for the new market or new segment, one of the big area we are working on that like the China med solution. For example, China med silicon, China med product from edge computing from the [ order book ] product in terms of [ order book ] product, even from the Flash storage memory. We are working with the regional vendor, supplier very closely. So we will soon provide the standard product -- [ advantaged ] standard product for China med and China med market, okay, which is in -- from [ product segment ] point of view, the bottom line, the product solution were designed from our China [indiscernible] design center and also manufacturing in our China factory. And our regional employees, our colleagues, will service locally, where this -- I think this is a big investment area also in line with our local GIRC, local engineering service centers. You have our goal and direction. So this is the investment and initiative that we foresee that China market will grow, and also the demand will increase from -- very significantly.

[Jill Su, executive]

Willy, do you have any further questions?

[William Chen, analyst]

Yes. Sorry. Sorry, I was on mute. So just wondering, in terms of the competition landscape, do we see any emerging Chinese players that have been pretty aggressive taking market share in China? Or it's more like the overall China market issue that was not much growth in the past 3 years?

[Eric Chen, executive]

I'm sorry. You mean that competition to impact our Advantech?

[William Chen, analyst]

Yes. The competition from locals or from other international business in China.

[Eric Chen, executive]

Yes. I'm sorry, yes. One of the big competition to Advantech from product line point of view is very [ low-TAM ] multiple market -- industrial multiple market. Actually, there are many for the ATM/POS machine, okay? The impact of that from 3 years ago.

Actually, our team from product division and also our sales division, they are working very closely to adjust the new market, for example, our AGV market; for example, the China charger station. They are all new segment that we can, I think, support our multiple and our systems to that market.

So even though there are some competition for the low-margin, low-value product line, but we're still working quite hard very closely with our local sales in our markets to adjust some new markets in order to sustain our business growth momentum.

[William Chen, analyst]

Okay. So sorry, one follow-up question regarding the near-term performance. You mentioned about September, October bookings in China grew about 20%. So do we expect full quarter numbers to improve versus third quarter, I mean, if only for China? Do we expect sequential improvement for the China operation in the third or fourth quarter? That's my question.

[Jill Su, executive]

Willy, this is Jill speaking. Because our booking number will have some of the time difference from booking to the real treatment, which will be around like 3 to 4 months' time difference. So if you're looking into our guidance, actually, we're indicating we will see a quarter-on-quarter decline, maybe single-digit quarter-on-quarter decline for our China business.

But maybe looking into quarter 4 2021, we'll see quarter-on-quarter increase because of the booking improvement.

[Operator]

No more questions at this time. [Operator Instructions] There are no further questions at this time. You may continue.

[Pauline Chen, analyst]

Yes. This is Pauline. So maybe I can have a follow-up question. I know, Jill, you briefly mentioned about the initiative you -- Advantech has been implementing like a [ profit/loan ]. But I wonder if there is -- Eric or Miller will have more -- a few more examples to show us what have you learned or done from the first wave of the COVID-19 outbreak, those initiatives that could help Advantech to mitigate the risk better if we are going to see the second wave of the outbreak.

And also, in your guidance, you talked about the Q4 European market probably would be seeing some improvement. But actually, recently, we are also hearing a lot of the European countries are going to shut down for another 1 month or 2. So will there be any negative impact on your guidance for the European market? That would be my 2 questions.

[Eric Chen, executive]

Let me try to answer the first question. At the beginning of the COVID-19 outbreak, we initiated 3 corrective initiatives, which included information, transparent financial evaluation and digital optimization.

As to the lesson learned to Advantech in the COVID-19 pandemic, Advantech will widen range in industrial solutions in different segments and application areas. In Service IoT, retail and [ logistics sector ] demand was dropped, while the med sector was strong. So we need to put more resources into the med segment to fulfill customer requirements, especially in the year 2021. This is the first lesson learned from the COVID-19.

And then second -- secondly, as a brand company, we try very hard to shift our marketing event from the offline to online and learn how to process a successful event -- successful online event and refine our e-store features to attract more general account to do business transactions or not.

And so on in the work-from-home situations, how to sustain and increase employee productivity is a key issue for Advantech to focus on since Advantech is not a pure software company. A lot of employee activity such as R&D and FAE still need to perform in -- at office to accomplish with certain types of equipment and devices.

So this is what we -- lesson learned, and we still have a lot of room to improve. So for the question of the impact if there is a second wave of the COVID-19 outbreak, I think the most significant impact would be the demand decline in specific sectors such as retail and the gaming sector Miller mentioned before. Both sectors demand declined around 14% this year. Besides, we are also afraid of the mega account postponed their design-in business with Advantech. This is the major impact -- my -- an impact to outlook in the year 2021 as well.

So I think the company, we try a lot of efforts to deal with COVID-19. So this is my quick -- my answer from your first questions.

[Miller Chang, executive]

Okay. This is Miller speaking. Regarding for the lesson learned from the COVID-19, from a product point of view, I think we are going to have more modular design and to push our internal product division that can be used for the module from the full design, for the system design. They can leverage the common parts. And does that mean they can reduce the cost -- design costs and time to market more efficiently? This is one way that we can do more.

And the other way is value-add -- try to add some more new value added. So for example, we won't know that IoT market, all the devices, edge computing, edge intelligence solution that needs to be connected together. That means that with more device management and data management is very important. Very happy that we, at Advantech, our R&D team can work on a solution put one together with our product to offer our customer device -- edge device, edge computing remote management from Internet or Intranet.

So value-added and some component cost reduction and also the use that can support us to have a better cost structure and also support our customer more efficiently. And the other way from a market point of view, as I mentioned earlier, some big area, big market, especially in a territory like U.S.A., China and Europe, we also have some new segments. We are working on that product division, again, product division and sales team, and work quite closely to focus on some new market development, business development that can support us to reduce the impact from some segments, they declined because of COVID-19 like gaming and retail sectors.

So this is what the action we can take from the product division and also from our sales division point of view. Thank you.

[Operator]

[Operator Instructions]

[Pauline Chen, analyst]

This is Pauline again. Maybe I will ask the last question, if the management team don't mind. So maybe a little bit longer term on the 5-year plan. So when you talk about the 5G impact, the IPC industry and the Advantech's position in this technology transition, how should we think of Advantech's position here? And also on the -- when you talk about the software platform, which is a very important role to achieve your 5-year plan, any progress and commentary on your software platform currently? That would be great.

[Miller Chang, executive]

Okay. This is, again, Miller speaking. Regarding for the 5G, [indiscernible], this is a high-speed and low -- they are high-speed and low latency. So I think 5G will speed up all the sector and industry, their product, their solution, moving to leverage the 5G technology very soon, okay? Actually, that is coming, okay?

So from the product development point of view, we will keep invest our resources to focus on -- to develop the powerful edge computing application for all applications. For example, like automation, medical, AI robotics, for example, okay? Those industries will require -- request for AI, request for the 5G high-speed networking and technology. This is very important.

And also, regarding for the subway development, as I mentioned earlier, subway and cloud services is also important to support the 5G technology. That's the reason our subway solution will focus on the device management, data management, also application management to support -- to cover all the cloud platform that major cloud platform from Microsoft Azure, Amazon AWS and also China cloud platform, Ali.

So this is the initiative from the product point of view. So I think that Advantech, we will keep invest our resources to secure our foundation of core business and foundation, that means embedded an automation platform business, and also speed up the investment to push the subway solution to work with our customers, focused on the AIoT target market. This is very clear to all Advantech product line and also for our regional sales business team, okay?

[Operator]

From the line, we don't have any more questions. You may continue for any closing remarks.

[Jill Su, executive]

So this is Jill Su. Thank you, everyone, for your time today. So if you have no further question, we might end now this earnings call. And I really appreciate everyone's effort here. So hope everybody is being safe, being healthy, and we will see a greater coming year. Thank you. Bye-bye.

[Eric Chen, executive]

Thank you.

[Miller Chang, executive]

Thank you.

[Operator]

Ladies and gentlemen, that does conclude your conference for today. Thank you for participating. You may now all disconnect.